core sector communique

Minera Alumbrera shareholders enter letter of intent for an option to acquire the Agua Rica copper gold project in Argentina

Buenos Aires, 8 March 2011 

 

Xstrata Copper and Goldcorp Inc. have entered into a Letter of Intent (“LOI”) with Yamana Gold Inc. that grants Minera Alumbrera  an exclusive option with respect to Yamana’s 100% interest in the Agua Rica copper gold project in Catamarca province in northwest Argentina. The transaction remains subject to the parties agreeing binding transaction documents.

 

Minera Alumbrera is a joint venture company between Xstrata Copper (Manager and 50% shareholder), Goldcorp (37.5%) and Yamana (12.5%). The Agua Rica deposit is located 35 kilometres southeast of Bajo de la Alumbrera copper and gold mine, operated by Minera Alumbrera.

 

The LOI outlines an agreement in which Minera Alumbrera will be granted an exclusive four-year option to acquire Yamana’s interest in the Agua Rica project for progressive option payments of up to US$110 million. Xstrata Copper and Goldcorp will finance all payments related to the option on a 57.14% and 42.86% basis respectively.

 

Xstrata Copper and Goldcorp can collectively elect to exercise the option at any time during the four-year period through an approval to proceed decision for construction of the Agua Rica project. On approval to proceed, Yamana would receive US$150 million and on commissioning an additional US$50 million. Yamana would also retain the right to a deferred payment related to 65% of the payable gold production from Agua Rica to a maximum of 2.3 million ounces.

 

Minera Alumbrera will manage the Agua Rica project and fund the completion of a final feasibility study and all development costs. The respective ownership interests in Minera Alumbrera would remain unchanged and apply to the Agua Rica project.

 

Xstrata Copper Chief Executive, Charlie Sartain said the option would enable Minera Alumbrera to further evaluate the potential of the Agua Rica project as part of that company’s long term growth strategy.

 

“The option in the Agua Rica project presents Minera Alumbrera with an attractive low-risk opportunity to expand its current operations and extend its current mine life by more than 25 years. On completion of the binding transaction documents, we look forward to working with our joint venture partners, relevant authorities and other key stakeholders, including Yacimientos Mineros de Agua de Dionisio¹, to assess the potential development of Agua Rica.”